Investopedia

Continue to Site »

Longevity Risk

Filed Under » , , ,
Dictionary Says

Definition of 'Longevity Risk'

The risk to which a pension fund or life insurance company could be exposed as a result of higher-than-expected payout ratios. Longevity risk exists due to the increasing life expectancy trends among policy holders and pensioners, and can result in payout levels that are higher than what a company or fund originally accounts for. The types of plans exposed to the greatest levels of longevity risk are defined-benefit pension plans and annuities, which guarantee lifetime benefits for policy or plan holders.
Investopedia Says

Investopedia explains 'Longevity Risk'

Average life expectancy figures are on the rise, but even a very small change in life expectancies can create severe solvency issues for pension plans and insurance companies. Precise measurements of longevity risk are still unattainable because the limit of medicine and its impact on life expectancies has not been quantified.

Articles Of Interest

  1.

    Protecting Your Retirement Assets

    Your golden years are meant to be stress free. Keep them that way by protecting your assets.

  2. Demographic Trends And The Implications For Investment

    See how people's movements, ages, deaths and buying patterns affect portfolios worldwide.

  3. Retire From Work, But Not Personal Financial Planning

    Here are some personal finance tips for those who want to live well after work ends.

  4. Stocks: Who Needs Them?! (You, If You Want To Retire)

    Stocks have long been trumpeted as necessary to ensure a comfortable retirement. But does that advice still make sense?

  5. What's The Minimum I Need To Retire?

    Make sure your golden years are golden, not merely a struggle for existence.

  6. Choosing The Right Retirement Destination

    Retire in a place that fits your plans for post-work living.

  7. Immediate Annuities: Guaranteed Payout At A Price?

    This vehicle can have very low, or even negative, rates. Find out when it pays to invest.

  8. Common Risks That Can Ruin Your Retirement

    These unexpected bumps can sideline your post-work plans and prevent you from riding out your assets.

  9. The Demise Of The Defined-Benefit Plan

    Experts are making bleak predictions for your post-work years. Be prepared and plan for your future.

  10. Watch Your Back In The Annuity Game

    Find out how to get the upper hand when dealing with this payout challenge.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  2. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  3. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  4. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  5. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  6. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.
Trading Center